For those of you who have spent any time in the real estate industry, it will be no shock to you, that commercial real estate is directly correlated with major economic indicators. To put it simply, if the economy isn't doing well, commercial real estate isn't doing well. That said, this correlation is not perfect. First off, commercial real estate tends to lag unemployment and the economy in general, and secondly, real estate is very much location driven, third - well there are a lot of things that change the game. With that in mind, I've been thinking about what real impact the credit crisis and the economy will have on NYC commercial real estate.

To that end, I've prepared a good and bad list:


  • The dollar is weak - driving foreigners to NYC who spend lots of money at retailers and invest in NYC properties
  • Vacancy is still very low at around 5%
  • No new product - With the exception of the SJP properties tower at 11 Times Square, no new major office buildings will become available until 2012 when the WTC opens
  • Most of the market is based on lease expirations, renewals and moves - this won't change


  • The dollar is weak - International tourism will keep NYC prices relatively high and will cause domestic tourism to slow.
  • Financial Companies imploding - The heart of the NYC office market are financial services companies and these companies are not doing well
  • High availability - While vacancy is still low, availability is going way up. According to Grubb & Ellis research, there are 64 blocks of office space north of 100,000 sf either available or becoming available soon. Many of these blocks are sublets from financial institutions
  • Unemployment is going up - Less employees means less space
  • Companies are not growing - enough said